Guidance on the Temporary Suspension of Employer Contribution 401(a) Plan

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The employer contributions made to the Chapman University Defined Contribution 401(a) Plan have been temporarily suspended while we manage the financial impact of the COVID-19 pandemic. Eligible employees (those working 20 or more hours per week) can continue to voluntarily contribute to their individual 403(b) Plans.

Key details regarding the temporary suspension of 401(a) contributions

Effective Date

  • Chapman is suspending temporarily all employer contributions to the 401(a) Plan. Employees can continue to contribute to their 403(b) Plan.
  • This change is effective for paychecks issued on or after August 1, 2020.  The next paycheck issued to you will NOT contain the employer 401(a) Plan contribution.

Chapman Retirement Plan Programs

Chapman has two Retirement Plan Programs: the Defined Contribution 401(a) Plan and the Tax Deferred Annuity 403(b) Plan.

  • The Defined Contribution 401(a) Plan is the plan Chapman has historically contributed to for eligible employees. This employer contribution consists of two layers:  (1) a 3% discretionary contribution based on base salary; and (2) a discretionary matching contribution of up to 6% of base salary for each dollar or percentage an employee contributes to their 403(b) Plan.
  • The Tax Deferred Annuity 403(b) Plan is the plan to which you contribute your own salary earnings.

Vesting Schedule for the 401(a) Plan

  • The 401(a) Plan’s vesting schedule will not change.
  • If you have already vested, which requires being continuously employed at Chapman for over 4 years, you remain vested and you own 100% of all monies in the 401(a) Plan.
  • If you have been here for less than 4 years and continue your employment with Chapman you will continue to vest according to the 4-year vesting schedule.

Contributions and Changes

  • If you are already contributing to your 403(b) Plan and wish to continue with no changes, no action is required.  You will continue contributing without interruption.
  • If you are already contributing to your 403(b) Plan and wish to make changes (e.g., increasing or decreasing your contribution), you will be required to complete and sign a new Salary Reduction Agreement.
  • Eligible employees can modify their 403(b) Plan contributions at any time, up or down, stop or start, provided you stay within the following IRS limits:
    • For 2020, the maximum allowable 403(b) Plan contribution is $19,500; however,
    • If the eligible employee is age 50 or older, the IRS also permits a “catch-up contribution” of up to an additional $6,500. That is on top of the $19,500.
    • If you would like to modify your withholding amount, please contact benefits@chapman.edu.

FAQs

Why is the University suspending the employer contribution to the 401(a) retirement plan?

On July 31, 2020, President Danielle Struppa communicated the temporary suspension of employer contributions into the Chapman University Defined Contribution (DC) 401a plan to avoid a more severe reduction in our campus workforce and any additional reductions in salary. The employer contributions are proportional to our salaries, and the decision has an additional built-in form of equity and allows faculty, staff and administration to be equal participants in the necessary sacrifices. You should know that this reduction can be easily restored if the economic situation improves before the end of the fiscal year.

What is included in the 401a plan?

The Defined Contribution 401(a) Plan is the plan Chapman has historically contributed to for eligible employees. The employer contribution into this plan consists of two layers:  (1) a 3% discretionary contribution based on base salary; and (2) a discretionary matching contribution of up to 6% of base salary for each dollar or percentage an employee contributes to their 403(b) Plan.  Both of these plans are temporarily suspended.

When is this happening?

The employer contributions to the DC plan will stop on August 1, 2020.  This temporary suspension will not affect your employee contributions to the Chapman University Tax Deferred Annuity (TDA) 403(b) retirement plan.

Do I need to take any actions to continue my contributions to the 403b plan?

No action is necessary to continue contributing to the 403(b) plan.  Contributions will continue unless you want to make a change.

When the temporary suspension is lifted, will matching contributions be applied for the missed time period?

At this time, the university is not planning to restore contributions missed during the temporary suspension.  Once matching contributions resume, it will be applied going forward based on the effective date of the change.

Will the vesting schedule for the 401(a) Plan change?

The 401(a) Plan’s vesting schedule will not change.

  • If you have already vested, which requires being continuously employed at Chapman for over 4 years, you remain vested and you own 100% of all monies in the 401(a) Plan.
  • If you have been here for less than 4 years and continue your employment with Chapman you will continue to vest according to the 4-year vesting schedule.

How can I make changes to my contributions to the 403(b) plan?

To make changes to your contributions, increase or decrease, stop or start you will need to complete a Salary Reduction Agreement form.  Once completed you can scan and email it to the Benefits Department at benefits@chapman.edu.

Changes are effective the 1st of the month following submission.

How can I review my current 403(b) contribution percentage?

You can log onto my.chapman.edu and review your current contribution percentage by clicking My Self Service > My Benefits and reviewing your Benefits Summary.

What should I look for on my paycheck?

All employer contributions to your retirement go to your 401a. The employer paid benefit referencing 403b on your pay stub represents the portion of the employer contribution to your 401a that matches up to 6% of your own 403b contribution.

  • In the “Employer Paid Benefits” section of your earnings statement, under the “current” column, the university discretionary matching contribution that is listed as “403b Basic” will show “0.00.”
  • The university 3% discretionary listed as 401a ER Non Contrib will also show 0.00. This update will appear on the August 14th paycheck for non-exempt employees (bi-monthly) or on the August 26th paycheck for exempt employees (monthly).
  • The year to date (YTD) matching contribution amount will still be displayed and will reflect employer contributions from January 1, 2020 – July 31, 2020.
  • To view your paycheck earnings statement, please log onto my.chapman.edu and click Self-Service > My Paycheck.

How do I calculate my employee contribution to reach the IRS maximum for this year?

Please email benefits@chapman.edu for assistance with calculating your employee contribution in order to reach the maximum for this year.

Additional Information: The IRS annual contribution limit on employee contributions to the 403(b) plan is $19,500 per calendar year for 2020. If you are age 50 or older, you are also eligible to make “catch-up” contributions, up to an additional $6,500 for calendar year 2020. As participants in the plan, you can contribute any percentage of your pay, up to 100%, up to the dollar limits listed.

What happens to the money that is in my Defined Contribution Retirement 403(b) plan account?

The money in your Defined Contribution Retirement Plan account remains as is.

Additional Help

Total Rewards

Our colleagues in Total Rewards can help you navigate through changes such as this. Feel free to engage your Total Rewards team at 714-628-2734 for additional help.

You are also encouraged to contact Fidelity or TIAA for personal financial planning:

TIAA

  • www.tiaa.org or 800-842-2776
  • Consultant: Heath Polzer
  • To schedule a phone or virtual consultation with TIAA Consultant, please call the TIAA Service and Scheduling Group at 800 732-8353 or sign up on the TIAA Appointments website.

Fidelity Investments

  • www.mysavingsatwork.com or 800-343-0860
  • Consultant: Christian Frost
  • To schedule a phone or virtual consultation with Fidelity Consultant, please call 800-642-7131 or sign up on the Fidelity Appointments website.